ALEXANDRIA, Va. —The NCUA has seen such an increase in credit unions with assets between $250 million and $500 million showing “some degree of financial stress”, it has lowered the threshold for joint exams from $500 million to $250 million.

As a result, the time NCUA examiners spend participating in joint exams has nearly doubled to 120,000 hours per year, NCUA Staff Attorney Steve Widerman told the NCUA Board on Tuesday during its monthly open board meeting.

During those joint exams, state and federal examiners disagreed on a credit union’s CAMEL rating approximately 2% to 4% of the time. When the variation in scores determines whether a federally insured state credit union is troubled versus untroubled, it becomes a significant supervisory issue, Widerman said.

Hence the NCUA’s proposed rule to allow the federal regulator to declare a state-chartered credit union troubled, a privilege that is currently only granted to state regulators. The rule is designed to guard against ratings discrepancies to better protect the share insurance fund, the NCUA said.

The proposed rule would defined a state-chartered, federally insured natural person or corporate credit union as “troubled” if either the state regulator or federal regulator assigns it a CAMEL or CRIS code 4 or 5 in either the Financial Risk or Risk Management categories.

Widerman told the board the rule isn’t meant to imply a lack of confidence in ratings assigned by state regulators. Rather, it aims to create a single, uniform definition for troubled credit unions.

“I think since we protect the share insurance fund we need to address issues at the earliest possible time,” she said.

Board Member Michael Fryzel, a former Illinois state regulator, asked Widerman if there is a provision in the proposed rule that would allow for federal examiners to consult with state examiners before issuing different CAMEL ratings.

Widerman replied that his office did investigate that point, and discovered that during dual exams, state and federal examiners regularly discuss ratings and resolve most ratings differences at that level.

The rule also makes some technical changes to the definition of troubled credit union, removing a non-applicable reference to a section of the Federal Credit Union Act, and removing language that would apply to state regulatory authorities that don’t use CAMEL or CRIS ratings; all states that regulate natural person or corporate credit unions now do.